The church and the new overtime regulations (one man's opinion)


So, I’m not a lawyer. I’m not an HR specialist. I don’t have any training in labor law. They used to say that an “expert” was someone who came from over 50 miles away and had an overhead projector. But I can’t find one.
The conference doesn’t provide legal advice and I’m not qualified to give it. ANY questions you might have about this subject should be directed to your attorney. OK, so I think I’ve laid the groundwork not to get sued. I hope so.
A lot of you have been asking my opinion about the new overtime regulations from the US Department of Labor (DOL) that go into effect on Dec. 1. Since there is no law against offering my opinion, you can take it for what it’s worth.
If you’ve been living in a cave, the commotion is about new regulations which were issued by the DOL in May that vastly expand the number of workers who are eligible for overtime pay. Until Nov. 30, many workers in certain occupations who earned over $23,660 could be considered as “exempt.” That means they could work over 40 hours a week and you didn’t have to pay them overtime or even track their hours. The new DOL regulations raised the threshold in one big jump to $47,476. Only the government could come up with these numbers.
The consternation that has been raised for churches is that many of them have employees who earn more than $23,660, but less than $47,476. For those workers who are no longer exempt, this means that the church MUST track their hours, pay them on the basis of an hourly employee and pay overtime if the employee earns it.
The regulations DO NOT specify how much the church has to pay employees. It only expands the eligibility of employees who are eligible for overtime.
I think this is actually an opportunity to correct an error that some churches are making. So let’s cut to the chase. Your secretary, your custodian, your youth worker, your music director, your organist and virtually every other employee who works in your church (except for clergy) are NOT self-employed contractors. And they never were. I understand the temptation. If the person who works for you is a self-employed contractor, you don’t have to issue a W-2, you don’t have to mess around with withholding tax, and you don’t have to pay FICA. The only disadvantage is, it’s illegal.
Misclassification of employee is a serious IRS infraction. One of these days, one of our churches is going to get tagged and you don’t want it to be yours. So get used to doing W-2 forms, withholding and paying FICA. If you can’t do it, hire a payroll service. There are many available and some do everything over the Internet.
So this is just my opinion, let the haters hate.
Therefore, having that corrected, let’s go on to the application of the new DOL regulations. A lot has been made of the theory that some churches are exempt because they do not engage in “commerce.” I think this is a waste of time. If your church operates a preschool or daycare, you may proceed to the next paragraph. You’re toast. Comply and get over it. As the white paper at indicates even though your church MAY be exempt, it is likely that your employees are not. So there are TWO ways to be in violation. Isn’t this fun?
As one would expect, I take the conservative approach and I would assume that my church is subject to the regulations, rather than place my hope in some theory that Big Brother has somehow overlooked little me. I can guarantee you that if DOL auditors come into your church, even if they agree that you are exempt, they are going to find other violations, so why raise red flags if you don’t have to?
And in reality, what’s going to change for you? How many of you have secretaries and custodians who work over 40 hours a week? And if they do, why wouldn’t you pay them overtime? Are your employees of so little value to you that you don’t want to pay them what they are worth?
I get this call at least once a year: “Do we have to pay our employees minimum wage?” I say, “The answer is “Yes” and why wouldn’t you want to? Are your employees not worth more to you than the person down the street flipping burgers?” (No offense intended toward burger flippers.)
Thus far, most of the concern about the new DOL regulations that have come to me are about youth workers. Evidently, these folks are the new exploited class in the church. (It’s a joke, OK?) That is not to say that churches are not cognizant that youth workers often work long hours for little pay. God bless them. Particular concern has been expressed when youth workers take groups to camp or mission trips. These are valid concerns and churches probably need to begin to think about different ways to perform these ministries.
One thing I have not stated explicitly yet is that pastors (clergy) are exempt from the DOL rules. It’s something ingeniously called “The Ministerial Exception.” This means that you can work your pastors as many hours as you want to without violating the law. And some do. And don’t try the fudge: “We have a youth MINISTER.” That’s not going to float unless your youth employee is a licensed or ordained minister in the United Methodist Church. You might want to work on that. We need pastors.
So, back to camps and mission trips. We might need to rethink how we do those. Actually, it was never acceptable to make your youth director work 24 hours a day at camp. There are rules about how long they can work and not get uninterrupted sleep (the key word for camp is “uninterrupted”). So churches might need to think about sending a team of counselors to camp and on mission trips so that they can tag team. Eight hours on and eight hours off would be a good idea and also humane. Churches might also want to think about utilizing more VOLUNTEERS for camp and mission trips. The regulations do not apply to volunteers… or pastors.
Remember…. Just one man’s opinion!
(Rick Van Giesen serves as the IGRC Treasurer and Benefits Officer.)